From the Desk of the Chief Economist
WE SECURED THE 2032 OLYMPICS – GO BRISBANE!!!
Those words were shouted by the many people who crowded Southbank on Wednesday 21 July, followed by fireworks popping and the Story Bridge lighting up in the Olympic colours.
The days after, saw a slew of congratulations, comments (both supportive and critical), and questions about ‘what will this mean? for Brisbane’. For the real estate industry, the question is clear: What will hosting the Olympics mean for our property market? How far will prices go?
It is key to observe how median house prices have travelled on two distinct occasions:
- International sporting events held in other capital cities within Australia
- International events held in Brisbane and South East Queensland
Sydney Olympics 2000
The 2000 Sydney Summer Olympics was one of the largest sporting events ever hosted in Australia. It required one of the largest recreational, cultural, and residential developments in Sydney’s history; with the total cost estimated at $6.6 billion. Since then the Olympic Park has undergone over $2.7 billion worth of development to continue the success of the area.
The athletes’ accommodation was reconfigured to offer 900 townhouses and 700 apartments. Newington and surrounding suburbs sales activity rose by 58.0% between 2000 and 2001 (the year after Olympics), and median house prices grew by 13.4% in the same period.
Median house price growth was not limited to the year after the Olympics. It grew by 38.5% two years after, and 66.4% three years after.
Brisbane World Expo 1988 and G20 Brisbane Summit 2014
World Expo 1988 and G20 Summit 2014 were key international events that were deemed to have “put Brisbane on the map” and paved the way for “world-class city Brisbane”.
We have compared median house prices for the 11 years prior to each actual event and quoted the 12 years growth to include the year after the event. This allows for a fairer comparison to Olympics 2032 timings.
Both events were located in Southbank and South Brisbane, thus we have included not only Brisbane local government area / council (LGA) median house prices but also data for impacted surrounding suburbs, as property transactions will also occur in nearby areas.
- Between 1977 and 1989, which captures the 11 years prior to Expo 1988 and the year after, Brisbane LGA median house price grew by 278.8%
- During this timeframe, median house prices in South Bank and its surrounding suburbs grew by an average 335.3%
- Between 2003 and 2015, which captures the 11 years prior to G20 Summit 2014 and the year after, Brisbane LGA median house price grew by 112.7%
- During this timeframe, median house prices in South Bank and its surrounding suburbs grew by an average 111.6%
- In the year after Expo 1988 Brisbane LGA median house price grew by 29.7%, South Bank and its surrounding suburbs grew by an average of 19.1%.
- In the year after G20 Summit 2014 Brisbane LGA median house price grew by 6.0%, South Bank and its surrounding suburbs grew by an average of 10.3%.
It is clear from the above key findings that hosting both Expo 1988 and G20 Summit has served the Brisbane property market well. That is both in the short term of one year after the event, and the long term throughout the 12 years time frame of preparation, hosting, and post-event.
Brisbane Median House Projection
Brisbane LGA median house prices have travelled upwards for the past 46 years, recording $810,000 as of 30th June 2021, breaking the $800,000 mark for the first time.
Brisbane LGA median house price grew exponentially after Brisbane World Expo in 1988, and even more so after G20 Brisbane Summit 2014.
In the 12 years between 2003 and 2015, median house prices grew by 112.7%. This takes into account the timeframe for G20 that is equivalent to now and 1 year after Olympics 2032. Applying this level of growth will result in a $1.7M median house price by 2033.
That said, data shows property price growth move at different speeds. There was higher growth in the 12 years between 1977 – 1989, the timeframe for Expo 1988, of 278.8%, versus 2003 – 2015, the timeframe for G20, of 112.7%.
Because of this difference, there is a potential that Brisbane’s median house price will not travel as far. That said, even if we go at “half strength”, metaphorically speaking 56.0% (112.7% divided by 2), that still takes us to $1.2M by 2033.
If we were to take historical data from the Sydney Olympics 2000, median house prices in Newington and surroundings grew by an average of 13.4% in the year after the Olympics were held. Applying 13.4% to the current median house price of $810,000 gives us $918,540.
Bearing in mind Olympics 2032 is still 11 years away and based on how the Brisbane market is travelling, the potential to eclipse this price point is high. Regardless of the calculation method, the conclusion points us to Brisbane becoming a $1M median house price city sooner rather than later.
As seen in previous international events there is a multiplier effect to the property prices in surrounding suburbs. Olympics 2032 events will be held in various suburbs throughout Brisbane, as well as on the Gold Coast and Sunshine Coast.
The year after the Sydney Olympics 2000, Newington and surrounding suburbs’ median house prices grew by 13.4%. The year after Expo 1988, South Bank and its surrounding suburbs grew by an average of 19.1% and grew by 10.3% after G20 Summit 2014.
Taking a simplified average approach between all three events gives us an average median house price growth of 14.3%. Applying this to 2021 median house prices results in many suburbs becoming $1M areas, such as Tennyson, Woolloongabba, and Herston.
Between 2003 and 2015, which captures the 11 years prior to G20 Summit 2014 and the year after, median house prices in South Bank and its surrounding suburbs grew by an average of 111.6%. If we were to apply this growth to suburbs where Olympics 2032 events will be held, we will see suburbs such as Hamilton and Chandler breaking the $3M median price mark, and currently extremely affordable areas such as Ipswich, Redland Bay, and Coomera breaking the $1M median price mark.
Again, going metaphorically at “half strength” due to different market speeds, and applying a 56.0% growth rate (111.6% divided by 2), creates many $1M and close to $1M suburbs: Tennyson ($1.5M), Redland Bay ($994K), Herston ($1.4M), Coomera ($865K), and Broadbeach unit market ($973K).
In conclusion, not only will we see immense price growth for Brisbane LGA as a whole, we will also see extraordinary markets in specific Olympic 2032 suburbs and surrounds.
As always, the correct policy and strategy are key.
At present, there are still many debates surrounding hosting the Olympics 2032, on a myriad of issues: cost to the tax-payers (and whether there is a better allocation for this), how well the Olympics will be managed (considering what happened at the Commonwealth Games 2018 in the Gold Coast), and whether or not it will have real long-term benefits for Brisbanites.
In the real estate world, a key question is whether or not Olympics 2032 will make Brisbane, from a purchasing power perspective, as unaffordable as Sydney. At present, local buyers do have an advantage, as we are still sheltered from international demand (borders closed). But the Games is 11 years away – this gives time for the world to re-open, economies to recover – and already we are seeing record-breaking property sales.
The Northshore Hamilton Priority Development Area (aka The Village) has been confirmed as the site of the Athlete’s Village for the Brisbane 2032 Olympic and Paralympic Games. More than 15,000 athletes will be residents over the course of both Games.
Once the Games are finished the Village will be repurposed to provide a diverse residential offering including: retirement living, aged care, social and affordable housing, student accommodation, Build-to-Rent, and market accommodation. It is predicted in total this new land supply will catalyse $500M in private investment and create 1600 construction jobs.
Whilst this sounds promising, there needs to be a clear and detailed execution strategy, including an intensive consultation process with key stakeholders.
The 2032 Olympic Games provides a golden opportunity for our three levels of Government to work together to create crucial infrastructure and unlock land supply. Increasing supply is key to housing affordability, given the potential demand the Games will attract.
Brisbane is a long way from Wagga Wagga but for those in that market or looking to be the prospect of a $1M median house price for Brisbane is a real possibility.